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A company operates a standard marginal costing system.Last month the company sold 200 units more than it planned to sell.
The following data relate to last month:
Selling price per unit:
Standard: $40
Actual: $38Variable cost p.u :
Standard :$30
Actual :$29What was the favourable sales volume contribution variance last month ?
The answer is $2,000 . How to arrive to this answer ? I dont have the working with me . They only provide the answer only . I tried but could not get the $2,000.
Calculations are pretty straight forward.
(Actual sales-budgeted sales) x SCM (standard contribution margin)Actual units are 200 higher than budgeted so Ans. should be favourable (Actual>budget)
SCM= ( std. selling price- std variable cost)
Which gives us
SCM=$40-30=$10
ANS. 200x$10=$2000 Fav.The standard contribution = 40 – 30 = 10 per unit.
They sold 200 more units than budget, so the sales volume variance = 200 x $10 = $2,000 favourable.
I do suggest that you watch my free lectures on variances. The lectures are a complete free course for Paper F2 and cover everything needed to be able to pass the exam well.
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